Costco is rewarding shareholders with a big payout ahead of the holidays, and it’s not too late to get in on the action. For the sixth time in company history, the retailer is offering a special dividend. To get the $30-a-share payout, announced Tuesday evening , investors must be shareholders of record by the close of business on Nov. 24. (Typically, that means you need to own the stock one business day prior.) It will be payable on Dec. 4. Costco also announced a $4 billion stock buyback plan, which is another way to return capital to shareholders because fewer shares outstanding means a higher ownership percentage in the company without having to purchase more stock. Jim Cramer praised the moves. On “Mad Money” after the announcement, he said, “Shame on those of us who, for a moment, thought maybe Costco was overvalued.” He added, “Glad that my Charitable Trust stuck with it. It’s a buy.” Before the opening bell, Jim said the stock should soon go back to record highs. It almost did Wednesday morning — rallying to a few dollars shy of its all-time high of $1,096 on May 19 before paring some of those gains. COST YTD mountain Costco YTD Earlier this month, after strong October sales, we documented the rise in Costco stock as the market has recently been rotating out of the AI trade and into consumer staple stocks like Costco and other defensive names. Quarter-to-date, Costco stock has soared more than 18%, bringing its year-to-date gains to 25%. For comparison, the S & P 500 is up 11.5% in 2026. If recent history is any guide, the five other special dividends issued by Costco, dating back to November 2012, have been good for an average stock gain of 1.5% for the roughly two-week period from the announcement day to the record date. The one announced on Dec. 14, 2023, was good for a 5% pop in the stock by the record date. That was the best stock performance of the bunch. On the flip side, the one announced on Nov. 28, 2012 resulted in a 4.9% decline in the stock by the record date. That was the worst. To be sure, those stock moves are a function of only looking at the charts, without taking into account other factors that may or may not have influenced the share prices during those time periods. Deutsche Bank also sees Costco’s latest payout as another reason to justify the stock’s high price-to-earnings ratio of 46.4 times next 12 months’ earnings estimates. The S & P 500’s forward P/E is less than half that. “While special dividends remain discretionary and do not change our underlying earnings outlook, we believe the increasing size of these distributions … provides another tangible proof point supporting Costco’s premium valuation,” the analysts wrote Tuesday evening. As veteran investors in Costco, we are not strangers to premium valuation. But time and time again, the stock has proven it is worth it, handily outperforming the S & P 500 over the long haul. Shares more than doubled over five years; soared more than 600% over the past decade;…
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